Can I apply for a loan before I find a property to purchase?

Yes. Applying for a mortgage loan before you find a home may be the best thing you could do. If you apply and qualify for your mortgage, we’ll issue an approval subject to you finding the perfect home. You can use the pre-approval letter to assure real estate brokers and sellers that you are a qualified buyer. Having a pre-approval for a mortgage may give more weight to any offer to purchase you make. When you find the perfect home, you’ll simply call your Home Loan Lender to complete your application. You’ll have an opportunity to lock in our great rates and fees, and we’ll complete the processing of your request.

What is a credit score and how will my credit score affect my application?

A credit score is one of the pieces of information we'll use to evaluate your application. Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this information converted into a number that helps a lender determine the likelihood that you will repay the loan on schedule. Credit scores are calculated by comparing your credit history with millions of other consumers. The credit score is calculated by the credit bureau, not by the lender.

Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past. Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit score, the lower the risk your payments won't be paid as agreed. Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when reviewing your loan application. However, there are other factors when making a loan decision and we evaluate an application by looking at the total financial picture of a customer.

Will the inquiry about my credit affect my credit score?

An abundance of credit inquiries can sometimes affect your credit scores since it may indicate your use of credit is increasing. However, the data used to calculate your credit score doesn't include any mortgage or auto loan credit inquiries that are made within the 30 days prior to the score being calculated. In addition, all mortgage inquiries made in any 14-day period are always considered one inquiry.

What can you expect when you apply for a mortgage?

First, you'll complete our online application.

The application will ask you questions about the home and your finances and will take approximately 20 minutes to complete. As soon as you've finished the application we'll review your request for a loan and, if authorized by you, will obtain a credit report.

After completing your application, a First Bank Financial Centre Home Loan Lender will contact you to discuss your loan application. Your Home Loan Lender is a mortgage expert and will explain the process and provide guidance along the way. Your Lender will ask you for any information and documentation required to make a decision about your loan. If you are purchasing a new home, the Lender will also contact the Real Estate Broker or the seller so they'll know whom to contact with questions.

We'll send you your application package.

The application package will be sent via U.S. mail or delivered by your Lender and will contain information and documents for you to sign along with a list of items we'll need you to provide. An application deposit may be requested in the package. We may order an appraisal from a licensed appraiser who is familiar with home values in your area. Depending on your loan amount request and value of the property an appraiser may need to schedule an appointment to view the interior of the home.

Title insurance will be necessary. If you're purchasing a home, we'll work with the real estate broker or seller to ensure the title work is ordered as soon as possible. If you are refinancing we'll take care of ordering the title work for you. We'll use the title insurance to confirm the legal status of your property and to prepare the closing documents.

Your Lender will keep you informed every step of the way via telephone or email.

We'll contact you to coordinate your closing date.

After we have received the application package from you, including requested documentation and application deposit, appraisal, and title work, we'll review the application and your Home Loan Lender will be in contact to advise you if your loan is approved with or without changes.

If you are purchasing a home, we'll also schedule the closing with the real estate broker and the seller. For a refinance of your current mortgage, your Home Loan Lender will coordinate the time and place for closing with you.

The closing will take place at one of our offices, or the office of a title company in your area who will act as our agent. A few days before closing, your Lender will contact you to walk through the final information.

How do you decide what you need from me to process my loan?

We take full advantage of an automated underwriting system, allowing us to request as little information as possible to verify the data you provided during your loan application. In many cases, a single W-2 or pay stub can be used to verify your income or a single bank statement can be used to verify the assets needed to close your loan.

What is an escrow or impound account?

An escrow or impound account is set up by your Lender during the loan closing to pay property taxes, fire and hazard insurance premiums, mortgage insurance premiums, and other escrow items on a monthly basis. Escrow accounts also protect homeowners from having to come up with several large, lump sum payments at different times throughout the year.

Will I have to have an impound/escrow account for the payment of my taxes and insurance?

You are not required to have an impound/escrow account unless the Loan-to-Value ratio on your loan is over 80%. Some loan programs require an escrow account regardless of Loan-to-Value ratios. Electing not to have an impound/escrow account will not affect the interest rate on your loan but the points may be increased by .25.

I’m self-employed. How will you verify my income?

Generally, the income of self-employed borrowers is verified by obtaining copies of personal (and business, if applicable) federal tax returns for the most recent two-year period to confirm the income is stable. We'll review and average the net income from self-employment that's reported on your tax returns to determine the income that can be used to qualify.

Will my overtime, commission, or bonus income be considered when evaluating my application?

In order for bonus, overtime, or commission income to be considered, you must have a history of receiving it and it must be likely to continue. We'll usually need to obtain copies of W-2 statements for the previous two years and a recent pay stub to verify this type of income. If a major part of your income is commission earnings, we may need to obtain copies of recent tax returns to average the amounts you have received over the past two years to calculate the amount that can be considered as a regular part of your income. If you haven't been receiving bonus, overtime, or commission income for at least one year, it probably can't be given full value when your loan is reviewed for approval.

I am retired and my income is from pension or social security. What will I need to provide?

We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited directly in your bank account. Sometimes it will also be necessary to verify this income will continue for at least three years since some pension or retirement plans do not provide income for life. This can usually be verified with a copy of your award letter. If you don't have an award letter, we can contact the source of this income directly for verification. If you're receiving tax-free income, such as social security earnings in some cases, we'll consider the fact that taxes will not be deducted from this income when reviewing your request.

How will rental income be verified?

If you own rental properties, we'll generally ask for the two most recent years of your personal and business federal tax returns to verify your rental income, depending on how you report the income. If you haven't owned the rental property for a complete tax year, we'll ask for a copy of any leases you've executed and we'll estimate the expenses of ownership.

I have income from dividends and/or interest. What documents will I need to provide?

Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so an average of the amounts you receive can be calculated. In addition, we will need to verify your ownership of the assets that generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or Promissory Notes. Typically, income from dividends and/or interest must be expected to continue for at least three years to be considered for repayment.

Will my second job income be considered?

I am relocating because I have accepted a new job that I haven’t started yet. How should I complete the application?

If you will be working for the same employer, complete the application as such but enter the income you anticipate you'll be receiving at your new location. If your employment is with a new employer, complete the application as if this were your current employer and indicate that you have been there for one month. The information about the employment you'll be leaving should be entered as a previous employer. Your Home Loan Lender will work with you to identify the documentation required to verify the change in employment.

I’ve had a few employers in the last few years. Will that affect my ability to get a new mortgage?

Having changed employers frequently is typically not a hindrance to obtaining a new mortgage loan. This is particularly true if you made employment changes without having periods of time in between without employment. We'll also look at your income advancements as you have changed employment. If you're paid on a commission basis, a recent job change may be an issue since we'll have a difficult time predicting your earnings without a history with your new employer.

I was in school before obtaining my current job. How do I complete the application?

If you were in school before your current job, enter the name of the school you attended and the length of time you were in school in the "length of employment" fields. You can enter a position of "student" and income of "0."

If my property’s appraised value is more than the purchase price can I use the difference towards my down payment?

Unfortunately no. If you are purchasing a home, we'll have to use the lower of the appraised value or the sales price to determine your down payment requirement. It's still a great benefit for your financial situation if you are able to purchase a home for less than the appraised value, but our investors don't allow us to use this "instant equity" when making our loan decision.

I’m getting a gift from someone else. Is this an acceptable source of my down payment?

Gifts are an acceptable source of down payment, if the gift giver is related to you or your co-borrower. We'll ask you for the name, address, and phone number of the gift giver, as well as the donor's relationship to you. Prior to closing, we'll verify the gift funds have been transferred to you by obtaining a copy of your bank receipt or deposit slip.

I am selling my current home to purchase this home. What type of documentation will be required?

If you're selling your current home to purchase your new home, we'll ask you to provide a copy of the settlement or closing statement you'll receive at the closing to verify your current mortgage has been paid in full and you'll have sufficient funds for our closing. Often the closing of your current home is scheduled for the same day as the closing of your new home. If that's the case, we'll just ask you to bring your settlement statement with you to your new mortgage closing.

Can I really borrow funds to use towards my down payment?

Yes, you can borrow funds to use as your down payment. However, any loans you take out must be secured by an asset you own. If you own something of value that you could borrow funds against such as a car or another home, it's a perfectly acceptable source of funds. If you are planning on obtaining a loan, make sure to include the details of this loan in the Liabilities section of the application. Discuss options with your Home Loan Lender.

I’ve co-signed a loan for another person. Should I include that debt here?

Yes, the debt should be entered in the Liabilities section of the loan application. Generally, a co-signed debt is considered when determining your qualifications for a mortgage. In order to eliminate the debt as a consideration to qualify for the loan, you can provide verification that the primary borrower responsible for the debt has made the required payments, by obtaining copies of their cancelled checks for the last twelve months.

I have student loans that aren’t in repayment yet. Should I show them as installment debts?

Any student loan that will go into repayment within the next six months should be included in the application. If you are not sure exactly what the monthly payment will be at this time, enter an estimated amount. If other student loans are reflected on your final credit report, which will not go into repayment in the next six months, we may need to ask you for verification that repayment will not be required during this time period.

How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?

If you've had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. Depending on the nature of the situation that caused the bankruptcy or foreclosure and the loan program guidelines, we will determine how much time must pass before qualifying for the loan requested. It is also important that you've re-established an acceptable credit history with new loans or credit cards.

What, exactly, is an installment debt?

An installment debt is a loan you make payments on, such as an auto loan, a student loan, or a debt consolidation loan. Do not include payments on other living expenses, such as insurance costs or medical bill payments. We'll include any installment debts that have more than 10 months remaining when determining your qualifications for this mortgage.